Co-operative Insurance Company’s claims-paying ability upgraded

Monday, 24 January 2011 00:43 - - {{hitsCtrl.values.hits}}

RAM Ratings Lanka recently recognised Co-operative Insurance Company’s emphasis on supporting its policyholders in their time of need by upgrading its claims-paying ability (CPA) from BB to BB+, with a stable outlook.

Reflecting the company’s commitment to continual improvement and its desire to deliver the best service possible, the upgraded rating takes into account the insurer’s strong capitalisation and successful financial performance.

The new BB+ CPA rating given by RAM Ratings Lanka is a truly independent measure of an insurer’s risk profile, using a number of quantitative and qualitative factors to sum up an insurer’s financial strength and its ability to meet its obligations to policyholders.

These factors include criteria such as regulatory environment, industry characteristics and trends, investment portfolio, capital strength, underwriting quality and risk exposure, profitability, competitive position, ownership quality, and overall management.

Powered by the strength of island-wide co-operative societies, the company is built on a ‘mutual insurance’ concept, where its owners and policyholders are the societies themselves. This innovative and fiscally prudent approach to pooling policyholders’ risks has driven Co-operative Insurance Company’s growth in both life and general insurance and allowed it to carve out a significant share of the rural market.

It is no surprise then that, in spite of difficult economic conditions, Co-operative Insurance Company has thrived relative to the rest of the industry. For example, while industry composite premiums actually shrank in the financial year ending December 2009, Co-operative Insurance Company’s composite premiums increased by 14.24%, a stunning achievement that reflects the market’s confidence in the company. This trend has continued in the first nine months of the financial year 2010, with overall gross written premiums increasing by 33.33% year-on-year.

In making its assessment of Co-operative Insurance Company, RAM Ratings Lanka noted that “the company has good potential for expansion” in the life insurance segment, given its “improving financial performance” and “the low penetration rate” in the area.

The ratings agency also cited the company’s “improved claims and cost control,” which has led to strong profits in both the General and Life insurance businesses. Indeed, while profit before tax for the General and Life insurance units in the 2009 financial year was Rs. 65.39 million and Rs. 56.72 million respectively, those numbers have increased dramatically to Rs. 82.14 million and Rs. 76.77 million in the first three quarters of the 2010 financial year alone. Having begun operations in 1999, Co-operative Insurance Company’s founding principles have driven it to greater and greater heights, while inspiring the quality service it has become known for. Equipped with its new BB+ CPA rating, Co-operative Insurance Company will continue to leverage the strength of its ethical approach to insurance in order to satisfy its policyholders.